On February 17, 2016, in Al Rushaid v. National Oilwell Varco, Inc., the US Court of Appeals for the Fifth Circuit joined the Second and Ninth Circuits in holding that orders denying arbitration before one arbitral body, but compelling it before another, are not appealable because the order ultimately does not require the parties to settle their dispute by means other than by arbitration (No. 15-20260, (Feb. 17, 2016)).

Plaintiffs Al Rushaid Parker Drilling, Ltd. (ARPD) and Rasheed al Rushaid sued several defendants, including National Oilwell Varco, Inc. (NOV), National Oilwell Varco LP (NOV LP), and National Oilwell Varco Norway (NOV Norway), for breach of contract. Plaintiffs alleged that the NOV defendants offered bribes and kickbacks to ARPD employees in exchange for providing inflated invoices of services provided. The case was removed to federal court in 2012 based on an arbitration clause in an NOV LP contract with ARPD.

Despite the arbitration clause, NOV LP proceeded to discovery and did not move to compel arbitration. However, when NOV Norway was served, it promptly sought to compel arbitration based on its own contract with ARPD. The district court denied NOV Norway's motion but the Fifth Circuit reversed on appeal, granted the motion to compel arbitration, and remanded the case back to the district court. On remand, all of the defendants jointly moved to compel arbitration. NOV LP sought arbitration based on the arbitration clause in its ARPD contract.

The district court found that NOV LP was entitled to arbitration based on its contract with ARPD but dismissed the claims by the other defendants, including the equitable estoppel arguments put forth by the other defendants (Nonsignatory Defendants) who were not signatories to any contracts containing arbitration clauses. All the defendants appealed the district court's decision.

On appeal, the Fifth Circuit affirmed the district court's order and:

The court first examined its jurisdiction over the signatory-defendants' appeals. While a court may not review an interlocutory order compelling arbitration (9 U.S.C. § 16(b)(3)), NOV LP argued that its appeal was reviewable because the same order compelling arbitration within the Southern District of Texas denied arbitration before the ICC.

The Fifth Circuit rejected this argument and explicitly adopted the principle articulated in the Second and Ninth Circuits: a party may not appeal a district court order unless the parties are ultimately forced to "settle their dispute other than by arbitration" (Augustea Impb Et Salvataggi v. Mitsubishi Corp., 126 F.3d 95, 99 (2d Cir.1997)). The lower court's order granted NOV LP's motion to compel arbitration, only in a different forum than the movant requested. Therefore, 9 U.S.C. § 16(b)(3) forbids appellate review of the order. As to NOV Norway, because its motion to compel arbitration was granted, the court found that the party had nothing to appeal. The court dismissed NOV Norway's appeal as well.

Regarding the nonsignatories, the court applied state law to determine that the nonsignatories were not estopped from denying that they had agreed to arbitrate the claims against them.

Litigants practicing in the Fifth Circuit should be aware that the Circuit has adopted the principle from the Second and Ninth Circuits circumscribing a court's jurisdiction to review an order compelling arbitration.